Optimal Educational Investment : Domestic Equity and International Competition

Abstract EN

We construct a family of models to analyse the effect on optimal educational investment of (i) society's preferences for equity and (ii) competition between countries.

The models provide insights about the impact of a variety of parameters on optimal policy.

In particular, we identify a form of “overeducation” that is new to the literature and provide a counterexample to a common finding in the literature on fiscal federalism.